Failure Of This Merck Study Is A 'Material Risk' But Analysts Are 'Extremely Bullish'

Merck & Co. Inc. MRK seems well positioned to surpass 2023 consensus estimates, driven by margin potential, according to Guggenheim.

The Analyst: Seamus Fernandez upgraded the rating for Merck from Neutral to Buy, while establishing a price target of $104.

The Thesis: The company’s margins are likely to be driven in 2023 by the Januvia patent win and positive trajectory for Keytruda and Gardasil, Fernandez said in the upgrade note.

Check Out Other Analyst Stock Ratings.

“We believe there is potential upside to sotatercept if the STELLAR trial succeeds this quarter; failure of STELLAR is a material risk (potential downside of 5-10%), but our KOLs remain extremely bullish and the recently published OLE supports the case for efficacy on the 6MWT endpoint,” the analyst wrote.

Post-STELLAR, we expect investor focus to shift to MRK’s oral PCSK9, given that management confirmed it can now produce the drug at global scale with a highly competitive cost structure, representing a $5-10B opportunity as a first-in-class oral treatment option for a validated MoA,” he added.

MRK Price Action: Shares of Merck climbed 2.60% to $89.88 in premarket trading on Monday.